Investment guru and author of The Gloom, Boom and Doom report Marc Faber has dismissed Barrack Obama’s speech, calling it “irrelevant” for global markets.

The US president pressed Congress on Thursday to act urgently to approve a jobs package of tax cuts and government spending he is proposing to pull the United States out of a “national crisis.”  He also announced a USD 447 billion jobs plan last night, aimed at giving a leg-up to the US economy.

It was not just Obama making statements.  Federal Reserve Chairman Ben Bernanke said on Thursday the US central bank would spare no effort to boost disappointingly weak growth and reduce unemployment, while downplaying concerns about inflation.

According to Faber, Bernanke’s speech was similar to the one he made earlier at the Jackson Hole policy meet. “I do not expect official announcement of QE3 with a huge monetization. They may do it silently,” he said adding, “money supply growing rapidly in US.”

On the currency front, Faber said, the dollar is in a better position against the euro.

Faber is bullish on gold and recommends investors to allocate some money to gold. ” In view of the slowdown in the global economies, I continue to recommend investors to set aside some money for gold.”

Meanwhile, he expects Indian stocks to well this year. “We could see shares rising by 5-8% per annum,” he estimated.

Below is a verbatim transcript of his interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.

Q: Do you expect strong relief reaction from global markets or do you think the markets may shrug off what came through from President Obama’s speech this morning?

A: The speech is quite irrelevant. It is more of the same government interventions. Obviously, it is a sign that the budget deficit in the US will not diminish meaningfully, that the government debt will continue to rise. We also had the speeches in Jackson Hole and again yesterday of Ben Bernanke which was more of the same. So I don’t think there will be a strong reaction.

Q: Do you think there will be something like a QE3 that the market has chosen to take away from Bernanke’s speech yesterday?

A: The money supply at the present time is growing very rapidly in the US. There maybe some technical reasons involved but while they won’t officially announce QE3 with a huge increase in monetisation, they may do it silently.

Q: If it is any form of liquidity infusion, what kind of impact do you think it may have for commodities and for the emerging market space?

A: We have to distinguish in the commodities market between the different sectors because obviously the price of cotton has very little to do with the price of orange juice and of gold. In view of the slowdown in the global economies, I am not very positive about industrial commodity prices but I continue to recommend investors to allocate some money to gold.

Q: What are you expecting on September 20 when the Fed meets for a couple of days? The market seems to be building up some expectations from that meeting?

A: Yes, the market is a discounting mechanism. The S&P this year peaked out on May 2, at 1,370 and dropped on August 9 to 1,102 and then rebounded to over 1,200. That rebound has already discounted some further easing measures by the Fed. Eventually, the market will break the August lows and move towards the 1,000 or even below 1,000 on the S&P and that all emerging stock markets, including, India will move lower.

Q: Do you see this rally to 1,200 for the S&P being short lived and in its last legs or do you think it can just amble around for a few more weeks before the breakdown that you refer too comes about through a specific trigger from the western world like Europe?

A: We were very oversold in early mid-August and we can rally a bit further. I don’t know the individual portfolios in the position of individuals in the market place but if someone has only 20% of his money in equities and the rest in other financial assets and real estate then he shouldn’t worry overly. But if someone is a 100% in equities, I would for sure use the strength as an opportunity to lighten up positions.

Q: There has been lot of analysis on what markets are doing right now versus the period they lived through in 2008-2009. How extended do you think this period of underperformance for equities maybe this time around?

A: Since early June, bonds and gold have rallied and equities have gone down. There are some uncorrelated assets and that is why I am telling individuals – you have to diversify because we don’t know how the world will look like in five years time.

If someone takes a five-10 year view to gradually accumulate Indian equities, it is okay but I don’t think they will go up by as much as individual investors think. Their dream of the Indian market going up by 20% per annum whereas in my view, if Indian stocks increase by around by 5-8% per annum, that will be about it.

Q: Where does the currency fit into this picture, especially, the dollar and the dollar index?

A: The dollar is in a marginally better position than the euro. I would expect the dollar to strengthen against the euro. All paper currencies are not particularly desirable and will lose their purchasing power for the simple reason that practically everywhere in the world, including, India we have negative real interest rates. If as an investor you put your money on deposits, the interest on your deposits especially after tax are essentially below the cost of living increases.

Q: Would you buy gold here or would you wait for a reaction to buy into it?

A: I have been recommending buying gold for the last 12 years. My strategy is to continue to accumulate gold. In fact, I could make an analysis to show that the price of gold today is probably cheaper than when it was USD 300 per ounce based on the increase in government debt, based on the increase in monetary base in the United States and based on the expansion of wealth in Asia. If I could compare say the gold price to the increase in wages in China and India over the last 10-20 years, then the price of gold is not particularly high. – Source: http://www.moneycontrol.com